IIF NBNI G-SIFI Response Letter

The second FSB/IOSCO Consultation on "ssessment Methodologies for Identifying Non-Bank Non-Insurer Global Systemically Important Financial Institutions" was due May 29. Supported by its NBNI Working Group the IIF has commented on this proposal.

While the IIF supports the goal of reducing systemic risk we think that the approach taken by the FSB and IOSCO is not appropriate to achieve this goal. We believe the data available clearly demonstrates that the asset management industry is not prone to systemic risk in the first place. However, if certain critical products or activities should be identified as systemically relevant, these products or activities would have to be treated with targeted industry-wide regulation. Singling out certain entities that offer such products or conduct such activity would at best be ineffective but could have severe negative repercussions on capital markets and on systemic risk itself. Furthermore, we think that the methodologies to identify systemic risk in NBNI sectors should be transparent, using reliable data and objective metrics that are risk-based and risk-sensitive. Any additional regulation of the asset management industry has to be balanced, should be product- or activity-based, and be applied industry wide and consistent across jurisdictions.'